The Prague Post Online: Business: Biz Week

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November 22nd, 2008

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Biz Week

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DEFICIT The deficit will total 70.8 billion Kč ($3.5 billion) next year, the Finance Ministry reported in a draft of the 2008 budget Sept. 3. The projected deficit would be 2.95 percent of the gross domestic product, putting the country on track for euro adoption. The budget is contingent on the reforms passed by the lower house last month, the ministry said.

EURO In related news, last week the Cabinet passed an updated strategy for joining the euro zone that, unlike previous versions, did not set 2012 as a target date for adoption. The government is reluctant to establish a binding date until all the reforms it says are necessary to correct public finances have been passed.

INTEREST In a surprise move, the Czech National Bank voted to increase its key interest rate from 3 percent to 3.25 percent Aug. 30, the third increase this year. The bank says the increase was in response to soaring wages and a spending boom, which threaten to increase inflation.

BIOFUELS All fueling stations in the country must now mix 2 percent biodiesel into their normal diesel fuel, thanks to regulations that came into effect Sept. 1. Analysts expect the addition, which comes in accordance with a European Union directive, could cause modest increases in the price of diesel.

TRANSPORT The Czech Republic will spend nearly 802 billion Kč on transportation infrastructure projects from 2008 to ’13, according to the Transportation Ministry. Some 150 billion Kč will be contributed from the European Union. Of the total amount, 564 billion Kč will be used for roads and motorways and 230 billion Kč for railways.

PRODUCTIVITY Czech workers lag behind their neighbors and the world’s leading economies in productivity, according to a report from the United Nation’s International Labor Organization. Domestic productivity in the country amounted to $23,452 per person, far behind the United States, the world’s leader at $63,885; much of the U.S. lead stemmed from the long hours logged by its workers.

FRAPORT The operator of the Frankfurt airport, Fraport AG, has expressed interest in purchasing the company running Prague’s Ruzyně Airport, a Fraport spokesman told the magazine Euro am Sonntag. Ruzyně is currently being converted to a joint-stock company, which should be completed by the end of the year, before its projected privatization.

LABOR The Cabinet has approved an amendment to the Labor Code that is expected to close several loopholes and flaws in the existing code, which came into effect Jan. 1. The amendment will allow longer working hours for teenagers and more flexible overtime schemes.

AAA The used-car dealer AAA Auto has announced that it will make an initial public offering (IPO) of 19.5 million shares on the Prague and Budapest stock exchanges this month. The company expects to raise some 1.2 billion Kč from the offering. AAA is wholly owned by Anthony Denny; after the IPO, his share in the company will drop to 71.9 percent.

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